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Mar 01, 2013, 07.44 PM IST | Source: CNBC-TV18

Budget Analysis: New regulator, award of 3k km road projs positive, says GVK

The appointment of new road regulator is a welcome move, Isaac George, Dir-Fin & CEO-Transportation, GVK Power told CNBC-TV18 cheering Budget 2013.

The only concern that I have is that these regulators should be made accountable and they will have to dispose cases that come to them in a timely manner unlike other regulators.

Isaac George

Director-Finance

GVK Power

The appointment of new road regulator is a welcome move, Isaac George, Dir-Fin & CEO-Transportation, GVK Power told CNBC-TV18 cheering Budget 2013 .

There has been a sharp drop in award of highway projects, so the new regulator must be accountable and should dispose cases in timely manner, he added.

Chidambaram also announced that 3000 km of road projects will be awarded in the first six months of 2013-14, tough this figure is much lower than the usual yearly target of 7,000-8,000 km announced in budgets in the last two years; George sees this as a positive step.

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However, issues relating to environmental clearance and land acquisition have to be solved without which awarding projects doesn't make much sense, he added.

Below is the edited transcript of Isaac George's interview with CNBC-TV18.

Q: FM said that they will be awarding about 3,000 kilometers of road projects in the coming year. These tall announcements have been made in many Budgets. How optimistic are you about things improving for the road sector in the coming year? Do you think setting up of the road regulator will be a major relief and could be the game changer?

A: There has been demand for a road regulator for quite sometime now. It is a welcome step and is a step in the right direction. There are issues that come up during construction and operation phase which is handled by National Highways Authority of India (NHAI) directly.

But with a regulator coming in, it will help because it would be an independent body that would evaluate and dispose of things in a prudent manner. The only concern that I have is that these regulators should be made accountable and they will have to dispose cases that come to them in a timely manner unlike other regulators. If that happens then it will greatly help developers.

Q: How optimistic are you about FY14 and the announcements made in the Budget?

A: The 3,000 kilometers of road projects that is likely to be awarded in the first six months of the financial year 2013-14 is a very positive thing. This year they were not in a position to meet their targets and if they are in a position to do these 3,000 kilometers it will be a very positive feature.

Issues like environmental issues, land acquisition, utility removal, forest clearances etc have to be solved. Without solving those issues awarding just 3,000 kilometers of road does not make much sense.

Q: You are stuck because of some seminal building blocks not being in place like land acquisition rules, environment rules. There is a certain uncertainty about what exactly is the government expecting on environment. If that is the situation how will the regulator help? These are fundamental political issues. The regulator may only keep delaying it. You will still be stuck for final answers?

A: That is why I said he will have to tackle the situation in a timely manner. Otherwise the presence of a regulator is not going to serve any purpose honestly speaking. So I presume that once the regulator is appointed, it will be in a position to help developers to resolve these issues.

Q: Do you see FY14 being better than FY13, do you see the government trying to address issues on the land acquisition or environment?

A: The government has at least woken up to the fact that there are issues that have got to be solved that is why you see the Cabinet Committee For Investments (CCI) have been set up. I hope it will be in a position to discharge whatever is required for them to do.

What they are trying to say is that projects which have not been able to progress because of certain critical approvals that they have not got, they would certainly try and speed up the entire process, so that the projects are not stalled.

So, the intention of the government is good, but whether they will be in a position to deliver is something that is to be seen. It is a wait and watch situation.

Q: They supposed rationalisation of duty between bituminous coal and other coal used for steam and power, is that rationalization going to make things expensive for you? Both of them have been made it at 2 percent customs duty and 2 percent countervailing duty (CVD), will the entire operations therefore make imported coal more expensive for you?

A: We are not importing any coal for that matter. We have only one thermal power plant and we have a captive coal mine associated with the thermal power plant. It is not going to make a difference for us, but as far as coal is concerned, the positive statement that I thought that the FM made was with respect to PPP in coal mining.

He has understood that the monopoly of Coal India is not going to help in the long run. He is now proposed a plan to introduce PPP with Coal India as one of the partners. That is by far one of the best decisions that he has taken to ensure that fuel supplies in future could be managed in a better manner.

GVK Power stock price

On September 02, 2014, at 12:12 hrs GVK Power & Infrastructure was quoting at Rs 13.82, down Rs 0.19, or 1.36 percent. The 52-week high of the share was Rs 20.85 and the 52-week low was Rs 6.15.


The latest book value of the company is Rs 15.69 per share. At current value, the price-to-book value of the company was 0.88.

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